Earnings per share of $0.22 (GAAP) and $0.25 (non-GAAP) versus $0.21
last year (see reconciliation below of earnings per share to adjusted
non-GAAP earnings per share)

“Our third quarter results represent the 13th consecutive
period of growth in comp store sales and earnings per share,” stated
Alex W. Smith, President and Chief Executive Officer. “Our team
continues to execute well, bringing the Pier 1 Imports customer a highly
differentiated assortment of merchandise that keeps her coming back to
both our stores and website. This marks the Company’s first full quarter
of e-Commerce sales and we’re pleased with the initial results, as the
level of both new and existing customer visits indicates the long-term
opportunity is significant. Indeed, we saw very strong traffic at both
our stores and Pier1.com during the period, and trends have remained
robust thus far in the holiday selling season.”

Smith continued, “The combination of our sizeable store base and
e-Commerce capabilities provides us with a powerful platform for growth.
We are continuing to build out our multi-channel functionality and
believe the business is ideally positioned to achieve the goals laid out
in our Three-Year Growth Plan. Our Board of Directors and management
greatly appreciate the support of Pier 1 Imports’ shareholders and
remain committed to returning value to them. Today, we are announcing
our third $100 million share repurchase program, reflecting our
confidence in the underlying strength of the business and the
significant potential ahead of us. Additionally, we have increased our
quarterly cash dividend by 25% to $0.05 per share.”

Third Quarter Results

For the third quarter ended November 24, 2012, the Company reported net
income of $23.7 million, or $0.22 per share. Third quarter adjusted net
income on a non-GAAP basis, which excludes the estimated impact of
Hurricane Sandy and utilizes an estimated 35.6% annual effective tax
rate for fiscal 2013 (as described below under Financial Disclosure
Advisory), was $27.1 million, or $0.25 per share. For the third quarter
ended November 26, 2011, the Company reported net income of $23.0
million, or $0.21 per share. Total sales for the third quarter of fiscal
2013 were $424.5 million, an increase of 10.9% versus $382.7 million in
the year-ago quarter. Comparable store sales increased 7.9% during the
third quarter on top of last year’s 7.0% gain. Strong comparable store
sales results for the period were primarily attributable to increases in
store traffic and higher average ticket.

Merchandise margins at the store level for the third quarter were
essentially flat compared to the same period last year. Merchandise
margins, including the direct-to-consumer business (“Pier 1 To-You”),
were 60.2% for the third quarter of this year. Store occupancy costs
were $69.4 million, or 16.3% of sales, compared to $66.2 million, or
17.3% of sales, last year. Gross profit for the quarter was $186.3
million, or 43.9% of sales, a 70 basis point improvement from $165.5
million, or 43.2% of sales in the third quarter of last year.

Third quarter selling, general and administrative expenses were $139.2
million, or 32.8% of sales, compared to $127.5 million, or 33.3% of
sales, in the same period of fiscal 2012. The 50 basis point improvement
was primarily due to the leveraging of store salaries and fixed
expenses, and was slightly offset by increases in marketing expense.

Operating income for the third quarter increased 18% to $38.8 million,
or 9.1% of sales, compared to last year’s third quarter operating income
of $32.9 million, or 8.6% of sales.

Year-to-Date Results

For the year-to-date period ended November 24, 2012, the Company
reported net income of $67.7 million, or $0.62 per share, which included
the tax benefit and reduced accrued interest resulting from the reversal
of a portion of the Company’s reserve for uncertain income tax positions
in the second quarter of fiscal 2013. For the first nine months of
fiscal 2013, adjusted net income on a non-GAAP basis was $65.7 million,
or $0.60 per share, and excludes the estimated impact of Hurricane
Sandy, utilizes an estimated annual effective tax rate of 35.6%, and
excludes the reversal of accrued interest referenced above (as described
below under Financial Disclosure Advisory). The Company reported net
income of $53.7 million, or $0.47 per share, for the same period last
year. Total sales for the first nine months increased 9.1% to $1.153
billion from $1.057 billion in the year-ago period. Comparable store
sales for the first nine months increased 7.3% versus a comparable store
sales increase of 9.2% in the year-ago period.

Merchandise margins at the store level for the first nine months of
fiscal 2013 were 60.3% compared to 59.9% in the same period last year.
Merchandise margins, including the direct-to-consumer business (“Pier 1
To-You”), were 60.2% for the first nine months of this year. Store
occupancy costs were $206.0 million, or 17.9% of sales, compared to
$199.3 million, or 18.9% of sales, last year. Gross profit for the first
nine months of fiscal 2013 was $488.1 million compared to $434.1 million
in the prior period, while gross margin was 42.3% compared to 41.1% in
the same period last year, an improvement of 120 basis points.

Year-to-date selling, general and administrative expenses were $367.6
million, or 31.9% of sales, compared to $342.4 million, or 32.4% of
sales, in the same period of fiscal 2012.

Operating income for the first nine months of fiscal 2013 increased 29%
to $98.5 million, or 8.5% of sales, compared to $76.5 million, or 7.2%
of sales, for the same period in fiscal 2012.

Balance Sheet and Share Repurchase Programs

As of the end of the third quarter, the Company remained in strong
financial condition with $120.8 million of cash and cash equivalents.
Inventory totaled $417.5 million, up 13.5% versus the end of last year’s
third quarter. The planned increase was primarily due to additional
inventory for the Company’s new e-Commerce business and slightly larger
purchases of merchandise in select categories, including seasonal goods,
to support higher sales. Capital expenditures for the first nine months
totaled $57.7 million and were primarily used for new store openings,
existing store fixtures and improvements, and infrastructure and
technology development, including the Company’s new e-Commerce platform
and point-of-sale system.

The Company reported today it has effectively completed its $100 million
share repurchase program, which was announced on October 14, 2011. As of
December 12, 2012, the Company had repurchased a total of 5,805,250
shares of its common stock under this share repurchase program at a
weighted average cost of $17.17 per share for a total cost of
approximately $99.7 million. During the third quarter ended November 24,
2012, the Company repurchased a total of 546,835 shares of its common
stock at a weighted average cost of $19.14 per share for a total cost of
approximately $10.5 million. Under this share repurchase program, the
Company repurchased approximately 5.3% of its common stock outstanding.

The Company today announced its Board of Directors has authorized a new
$100 million share repurchase program. The new share repurchase program
is effective immediately and authorizes the repurchase of up to $100
million of the Company’s common stock in open market or private
transactions. The timing of the repurchases will depend on several
factors, including prevailing market conditions and prices.

Declaration of Quarterly Cash Dividend

The Company today announced that its Board of Directors declared a $0.05
per share quarterly cash dividend on the Company’s outstanding shares of
common stock, reflecting a 25% increase from the previous quarterly cash
dividend. The $0.05 quarterly cash dividend will be paid on January 30,
2013 to shareholders of record on January 16, 2013. As of December 13,
2012, approximately 106.0 million shares of the Company’s common stock
were outstanding.

Financial Guidance

The Company’s fiscal 2013 fourth quarter and fiscal year will include 14
weeks and 53 weeks, respectively, of operating results. The Company
provided the following financial guidance for the fiscal 2013 fourth
quarter on a 13-week basis:

Comparable store sales growth in the mid single-digit range

Earnings per share (GAAP) in the range of $0.55 to $0.59, utilizing an
effective tax rate of 38.5%

Earnings per share (non-GAAP) in the range of $0.57 to $0.61,
utilizing an annual effective tax rate of 35.6%

The Company provided the following updated financial guidance for full
fiscal year 2013 on a 52-week basis:

Comparable store sales growth in the mid single-digit range

Earnings per share, on both a GAAP and non-GAAP basis, in the range of
$1.17 to $1.21

Capital expenditures of approximately $70 to $75 million

The 14th and 53rd week is expected to contribute
approximately $25 million to total sales and approximately $0.02 to
earnings per share.

Third Quarter Results Conference Call

The Company will host a conference call to discuss fiscal 2013 third
quarter financial results at 10:00 a.m. Central Time today. The call can
be accessed through the Investor Relations page of the Company’s website
at www.pier1.comor by dialing 1-800-498-7872, or if international, 1-706-643-0435.
The conference ID number is 59879356.

A replay will be available beginning at approximately 12:00 p.m. Central
Time for a 24-hour period and can be accessed by dialing 1-855-859-2056,
or if international, 1-404-537-3406 using conference ID number 59879356.

Financial Disclosure Advisory

This release references non-GAAP information for the three and nine
months ended November 24, 2012 as shown in the table below.

The Company reports its financial results in accordance with U.S.
generally accepted accounting principles (GAAP). The Company believes
that the non-GAAP financial measures included in this press release
allow management and investors to understand and compare the Company’s
earnings per share results in a more consistent manner for the three and
nine months ended November 24, 2012. The non-GAAP measures should be
considered supplemental and not a substitute for the Company’s net
income and earnings per share results that will be recorded in
accordance with GAAP for the periods presented.

Management’s expectations and assumptions regarding future results are
subject to risks, uncertainties and other factors that could cause
actual results to differ materially from the anticipated results or
other expectations expressed in the forward-looking statements included
in this press release. Any forward-looking projections or statements
should be considered in conjunction with the cautionary statements and
risks contained in the Company’s Annual Report on Form 10-K. Refer to
the Company’s most recent SEC filings for any updates concerning these
and other risks and uncertainties that may affect the Company’s
operations and performance. The Company assumes no obligation to update
or revise its forward-looking statements even if experience or future
changes make it clear that any projected results expressed or implied
will not be realized.

Pier 1 Imports, Inc. is the original global importer of imported
decorative home furnishings and gifts. Information about the Company is
available on www.pier1.com.

Pier 1 Imports, Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands except per share amounts)

(unaudited)

Three Months Ended

November 24,

% of

November 26,

% of

2012

Sales

2011

Sales

Net sales

$

424,527

100.0

%

$

382,699

100.0

%

Cost of sales

238,268

56.1

%

217,209

56.8

%

Gross Profit

186,259

43.9

%

165,490

43.2

%

Selling, general and administrative expenses

139,244

32.8

%

127,514

33.3

%

Depreciation and amortization

8,192

2.0

%

5,104

1.3

%

Operating income

38,823

9.1

%

32,872

8.6

%

Nonoperating (income) and expenses:

Interest and investment income and other

(298

)

(3,238

)

Interest expense

664

739

366

0.0

%

(2,499

)

-0.6

%

Income before income taxes

38,457

9.1

%

35,371

9.2

%

Income tax provision

14,772

3.5

%

12,383

3.2

%

Net income

$

23,685

5.6

%

$

22,988

6.0

%

Earnings per share:

Basic

$

0.22

$

0.21

Diluted

$

0.22

$

0.21

Dividends declared per share:

$

0.04

$

0.00

Average shares outstanding during period:

Basic

105,419

108,713

Diluted

107,308

110,306

Pier 1 Imports, Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands except per share amounts)

(unaudited)

Nine Months Ended

November 24,

% of

November 26,

% of

2012

Sales

2011

Sales

Net sales

$

1,153,260

100.0

%

$

1,056,854

100.0

%

Cost of sales

665,179

57.7

%

622,775

58.9

%

Gross Profit

488,081

42.3

%

434,079

41.1

%

Selling, general and administrative expenses

367,596

31.9

%

342,416

32.4

%

Depreciation and amortization

21,936

1.9

%

15,171

1.5

%

Operating income

98,549

8.5

%

76,492

7.2

%

Nonoperating (income) and expenses:

Interest and investment income and other

(2,169

)

(8,441

)

Interest (income) expense

(629

)

2,279

(2,798

)

-0.3

%

(6,162

)

-0.6

%

Income before income taxes

101,347

8.8

%

82,654

7.8

%

Income tax provision

33,607

2.9

%

28,929

2.7

%

Net income

$

67,740

5.9

%

$

53,725

5.1

%

Earnings per share:

Basic

$

0.64

$

0.47

Diluted

$

0.62

$

0.47

Dividends declared per share:

$

0.12

$

0.00

Average shares outstanding during period:

Basic

106,601

113,767

Diluted

108,502

115,490

Pier 1 Imports, Inc.

CONSOLIDATED BALANCE SHEETS

(in thousands except share amounts)

(unaudited)

November 24,

February 25,

November 26,

2012

2012

2011

ASSETS

Current assets:

Cash and cash equivalents, including temporary investments of
$97,064, $248,624 and $136,765, respectively